Estimating the natural rate of unemployment for Ukraine

Artem Vdovychenko

No 21-2022, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: In this study, we apply the Kalman filter to estimate the set of reduced-form Phillips curves for different types of inflation in Ukraine. Based on the estimated models, we derive a number of series of non-accelerating inflation rate of unemployment (NAIRU) that provide information about the general trajectory and last tendencies of trend unemployment. To better identify the unemployment trend, we include indicators of long-term unemployment and the Beveridge curve shifts as exogenous variables in the NAIRU equation. Both variables demonstrate a significant impact on NAIRU dynamics. Our estimates show that the Phillips curve slope in Ukraine lies in a standard range of -0.3 to -0.5, with high statistical significance. The median value of estimated NAIRUs was at its lowest at 7.2% at the end of 2008, after which it gradually increased to 9.4% by the end of 2021.

Keywords: Phillips curve; unemployment; NAIRU; Kalman filter; Beveridge curve (search for similar items in EconPapers)
JEL-codes: E24 E31 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2022-04-10
New Economics Papers: this item is included in nep-cis and nep-tra
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